BIR Ruling

December 9, 1966 Mr. Domingo Bongala Suite 627-A, 6th Floor Philamlife Building United Nations Avenue Manila S i r : This refers to your letter dated November 22, 1966 requesting legal opinion on the following questions: "1. If a company insures its keyman and the Company pays for the premium. But the beneficiaries are the wife and children of the insured (the keyman, employee of the Company). QUESTIONS : "A. Will the insured (keyman) pay an Income Tax on the premiums paid by the Company? "B. What are the Taxes, if there are any, to be paid by the Company and the insured (keyman)? "2. If a Company insures its keyman and the Company pays for the premium. However, the beneficiary is the Company. QUESTIONS : "A. Will the insured (keyman) pay an income tax on the premiums paid by the Company? "B. If there are Taxes to be paid by the Company and the insured (keyman), what are they? In reply, I have the honor to inform you as follows: (1) If a company insures its keyman with the wife and children of the insured as the beneficiaries, the premium paid by the employer-company is a deductible business expense of the latter, and the same premium constitutes additional compensation to the insured (keyman) under Section 37(A)(3) of the Tax Code subject to income tax. cdtech (2) Any premium paid by the Company for the insurance of its keyman where the beneficiary is the Company, is not deductible expense from the gross income of the Company. Insured keyman is not liable to tax on the premium paid as it is not considered additional compensation to him. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue